ENVIRONMENTAL PROTECTION AGENCY

[FRL-9299-4]

Notice of a Regional Waiver of Section 1605 (Buy American Requirement) of American Recovery and Reinvestment Act of 2009 (ARRA) to the Virginia Department of Environmental Quality (VADEQ)

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

SUMMARY: The Regional Administrator of EPA Region III is hereby granting a waiver of the Buy American requirement of the American Recovery and Reinvestment Act of 2009 (U.S. Pub. L. 111-5) (ARRA) Section 1605(a) under the authority of Section 1605(b)(1) (public interest waiver) to VADEQ forde minimisincidental components of eligible water infrastructure projects funded underVADEQ's ARRA Leaking Underground Storage Tank (LUST) grant. This action permits the use of non-domestic iron, steel, and manufactured goods when they occur inde minimisincidental components of such projects that would otherwise be prohibited under Section 1605(a).

In accordance with ARRA Section 1605(c), the EPA hereby provides notice that it is granting a waiver of the requirements of Section 1605(a) of Public Law 111-5, Buy American requirements, to VADEQ for projects funded under their ARRA LUST grant, based on the public interest authority of Section 1605(b)(1). EPA issued a Nationwide “public interest” Buy American waiver on May 22, 2009 to allow the use ofde minimisincidental components of eligible projects for Clean or Drinking Water State Revolving Fund (SRF) projects where such components comprise no more than 5 percent of the total cost of the materials used in and incorporated into a project. EPA Region III believes that the justifications applied to the SRF Buy American waiver pertain to equivalent drinking water infrastructure projects being completed under VADEQ's ARRA LUST grant, that are being used to extend public water lines to properties with petroleum-contaminated drinking water wells.

Among the General Provisions of ARRA, Section 1605(a) requires that “all of the iron, steel, and manufactured goods used in” a public works project built with ARRA funds must be produced in the United States unless the head of the respective Federal department or agency determines it necessary to waive this requirement based on findings set forth in Section 1605(b). In implementing ARRA Section 1605, EPA must ensure that the Section's requirements are applied consistent with congressional intent in adopting this Section and in the broader context of the purposes, objectives, and other provisions of ARRA applicable to projects funded under the Underground Storage Tank funds. Further, Congress' overarching directive to

“[t]he President and the heads of Federal departments and agencies [is that they] shall manage and expend the funds made available in this Act so as to achieve the purposes [of this Act], including commencing expenditures and activities as quickly as possible consistent with prudent management.” [ARRA Section 3(b)].

Water infrastructure projects typically contain a relatively small number of high-cost components incorporated into the project that are iron, steel, and manufactured goods, such as pipes, tanks, pumps, motors, instrumentation and control equipment, treatment process equipment, and relevant materials to build structures for such facilities as treatment plants, pumping stations, pipe networks, etc. In bid solicitations for a project, these high-cost components are generally clearly described via project specific technical specifications. For these major components, utility owners and their contractors are generally familiar with the conditions of availability, the approximate cost, and the country of manufacture of available components.

Every water infrastructure extension project also involves the use of literally thousands of miscellaneous, generally low-cost components that are essential for but incidental to the construction, and are incorporated into the physical structure of the project, such as nuts, bolts, other fasteners, tubing, gaskets, etc. These incidental components are subject to the Buy American requirement of ARRA Section 1605(a), as stated above.

In contrast with the situation applicable to major components with regard to country of manufacture, availability, and procurement process, the situation applicable to these incidental components is one where the country of manufacture and the availability of alternatives are not readily or reasonably identifiable prior to procurement in the normal course of business. Particularly under the time constraints outlined above, it would be laborious, likely unproductive as to feasible alternatives, and disproportionate to the costs and time involved for an owner or its contractor to pursue such inquiries.

While evaluating the SRF waiver in 2009, EPA undertook multiple inquiries to identify the approximate scope ofde minimisincidental components within water infrastructure projects. EPA consulted informally with many major associations representing equipment manufacturers and suppliers, construction contractors, consulting engineers, and water and wastewater utilities, and a contractor performed targeted interviews with several well-established water infrastructure contractors and firms who work in a variety of project sizes, and regional and demographic settings. The contractor asked the following questions:

—What percentage of total project costs were consumables or incidental costs?—What percentage of materials costs were consumables or incidental costs?—Did these percentages vary by type of project (drinking water vs. wastewater; treatment plant vs. pipe)?

The responses were consistent across the variety of settings and project types, and indicated that the percentage of total costs for drinking water or wastewater infrastructure projects comprised by these incidental components is generally not in excess of 5 percent of the total cost of the materials used in and incorporated into a project. Additionally, VADEQ investigated costs of LUST projects comprised by these components, and reports that the components will not exceed 5 percent of the total cost of those projects. In drafting this waiver, EPA has considered thede minimisproportion of project costs generally represented by each individual type of these incidental components within the hundreds or thousands of types of such components comprising those percentages, the fact that these types of incidental components are obtained by contractors in many different ways from many different sources, and the disproportionate cost and delay that would be imposed on projects if EPA did not issue this waiver.

Under such specific circumstances associated with these particular types of incidental components, EPA has found that it would be inconsistent with the public interest—and particularly with ARRA's directives to ensure expeditious water infrastructure construction consistent with prudent management, as cited above—to require that the national origins of these components be identified in compliance with Section 1605(a). Pursuant to ARRA Section 1605(b)(1), EPA is hereby issuing a waiver to VADEQ from the requirements of ARRA Section 1605(a) for the incidental components described above as ade minimisfactor in the ARRA LUST projects, where such components comprise no more than 5 percent of the total cost of the materials used in and incorporated into a project.

VADEQ should, in consultation with their contractors, determine the items to be covered by this waiver, must retain relevant documentation of those items in their project files, and must summarize in reports to EPA the types and/or categories of items to which this waiver is applied, the total cost of incidental components covered by the waiver for each type or category, and thecalculations by which they determined the total cost of materials used in and incorporated into the project.

For the foregoing reasons, imposing ARRA's Buy American requirements for the category ofde minimisincidental components described herein is not in the public interest. This supplementary information constitutes the “detailed written justification” required by Section 1605(c) for waivers “based on a finding under subsection (b).”